It always amazes us how many people have managed to amass fairly large sums of money and still don’t have enough sense to put it into a high yield savings account. Let’s face it, if you’ve gone to all the work of earning your money, and you didn’t turn around and spend it having fun, you should at least put your money to work for you earning a reasonable interest rate.
Don’t get us wrong, it’s your money. Do whatever you want to with it. But in our opinion, keeping any more than $1,000 in a passbook savings account instead of putting it into a high yield savings account makes about as much sense as one of these other options:
- Keep it in the drawer. On the plus side, you’ll always be able to find it. On the negative side, so will the average burglar or teenager (and if you have teenagers, you know the difference is negligible).
- Carry it in your wallet. This gives you the benefit of always having your money with you, so you can be sure that it’s safe. Unfortunately, it makes it awfully hard not to spend it all whenever you see something you want. And even if you can keep those urges under control, wallets full of money tend to attract muggers, used car salesmen and others who have impure motives for your cash.
- Put it in a passbook savings account. Why would you put your money someplace where it’s only going to earn half a percent interest? And even if and when interest rates do go up, you’ll still be better off putting your money someplace where it will grow faster.
- Lend it to your brother in law. There’s a name for money that you lend to in-laws. Say it with me: “Gift.” At least, that’s the way they’ll remember it, especially if you end up getting a divorce.
- Invest in on a hot, inside tip. It’s a great idea if you get away with it. Unfortunately, most people don’t. And when they catch you, the government takes everything you gained, adds a ton of fines and (best for last) gives you accommodations in the local slammer for a lot longer than you wanted to stay.